Upwind, a San Francisco-based startup specializing in AI-powered cloud infrastructure security, has closed a $400 million Series C funding round led by Bessemer Venture Partners, valuing the company at $3.8 billion. Existing investors including Greylock Partners and Craft Ventures also participated in the round. This funding follows a $250 million raise nine months earlier, which valued Upwind at $1.5 billion.
The new financing was nearly derailed when Datadog, a publicly traded observability software provider, attempted to acquire Upwind. According to a source familiar with the matter, Datadog’s offer matched the $3.8 billion valuation set by venture capital investors but did not include a premium. As a result, Upwind opted to remain independent.
Founded four years ago by Amiram Shachar, who previously sold Spot.io to NetApp for $450 million, Upwind has experienced rapid growth amid increasing AI-driven cybersecurity threats. The company adds between $20 million and $30 million in annualized recurring revenue (ARR) each quarter and is projected to reach approximately $90 million in ARR by the end of the year. This places Upwind’s valuation at over 40 times its forecasted ARR, a multiple that is high but still below that of some peers like Cyera.
Upwind’s security approach focuses on "runtime" protection, which involves detecting and mitigating threats in real time within active cloud services. This method addresses vulnerabilities as they occur, enhancing cloud infrastructure resilience.
Industry observers note that cybersecurity is emerging as a significant area for AI software investment, following AI tools for coding and customer support. Despite turning down Datadog’s offer, Upwind remains a target for acquisition interest, though an eventual sale is considered the most probable exit strategy given the limited number of cybersecurity companies going public recently.
Both Upwind and Datadog have yet to comment on the funding and acquisition discussions.